Of 8-1
Fundamentals Organizing
Organization
depicts
chart
the positions in the firm and how they are arranged provides a picture of the reporting structure
Differentiation
aspect
of the organizations internal environment differentiation is high when there are many subunits and many kinds of specialists who think differently
Integration
degree
to which differentiated units work together and coordinate their efforts any job activity that links different work units performs an integrative function
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-2
Conventional Organization Chart
President
Finance Chemical Products Personnel
R&D
Marketing Metal Products
Personnel
Finance
Personnel
Finance
Manufacturing
Sales
Manufacturing
Sales
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-3
The Vertical Structure
Authority
in organizations
authority
resides
- the legitimate right to make decisions and to tell other people what to do
in positions rather than people
board
of directors - elected by the stockholders to run the organization chief executive officer (CEO) - occupies the top of the organizational pyramid top management team - comprised of the CEO, president, chief operating officer, chief financial officer, and other key executives
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-4
The Vertical Structure (cont.)
Hierarchical
hierarchy
top
levels
- the authority levels of the organizational pyramid
management - strategic managers in charge of the entire organization middle management - in charge of plants or departments lowest levels - made up of lower management and workers
called the operational level of the organization
trend
in U.S. is to reduce the number of hierarchical layers
Span
the
of control
number of subordinates who report directly to a manager narrow spans produce tall organizations wide spans produce flat organizations
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-5
The Vertical Structure (cont.)
Decentralization
result
of the delegation of responsibility and authority centralized organization - high-level executives make most decisions and pass down for implementation decentralized organization - lower-level managers make important decisions
Departmentalization
subdividing
line
the organization into smaller subunits
departments - responsibility for principle activities of the
firm staff departments - provide specialized support for line units
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-6
Functional Structure
Departments
Efficient
created around specialized activities such as production, marketing and human resources
+ Functional groups keep on top of environment + Performance standards clear within field + Skill development from others in field + Overspecialization may occur Functional integration might not happen Us vs. them mentality
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-7
Functional Structure
President
Staff departments
Information technology services
Procurement
Human resources
Inbound logistics
Operations
Outbound logistics
Marketing And sales
Service
Line departments
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-8
The Horizontal Structure (cont.)
Divisional
units
organization
grouped around products, customers, or geographic regions groups all functions into a single division
duplicates
each function across all of the divisions
separate
divisions may act almost as separate businesses work autonomously to achieve the goals of the organization several ways to create divisional structure managers become generalist, not specialist enhance may responsiveness
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-9
Divisional Structure (Product)
CEO (Les Wexner) Apparel Express Limited Stores Express Limited Stores Structure Lerner New York Lane Bryant New York & Co. Intimate Brands Victorias Secret Bath & Body Works White Barn Candle Co. Support Businesses Distribution Services Real Estate Store Planning Design Services
limited
the
Brand & Creative Services Technology Services
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8-10
Geographical Organization
Chairman CEO
Northeast regional manager
Midwest regional manager
Southeast regional manager
Southwest regional manager
Pacific regional manager
General managers for: New York Philadelphia Boston
General managers for: Cleveland Chicago St. Louis
General managers for: Raleigh Atlanta Orlando
General managers for: Dallas Houston Albuquerque
General managers for: Seattle San Francisco Los Angeles
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-11
The Horizontal Structure (cont.)
Matrix
organization
hybrid
form of organization combines functional and divisional dual reporting relationships in which some managers report to two superiors
one
functional and one product degree of flexibility and adaptability of the unity of command principle
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
advantages
higher
disadvantages
violation
reporting to two superiors can create confusion
8-12
Matrix Organizational Structure
Chairman CEO
Project management
Functional managers
Production group Two-boss manager
Production
Engineering
Personnel
Accounting
Project Manager A
Engineering group Two-boss manager
Personnel group Two-boss manager
Accounting group Two-boss manager
Project Manager B
Production group Two-boss manager
Engineering group Two-boss manager
Personnel group Two-boss manager
Accounting group Two-boss manager
Copyright2002byTheMcGrawHillCompanies,Inc.Allrightsreserved.
8-13
The Horizontal Structure (cont.)
Matrix
the
organization (cont.)
survival skills - depend on position in the matrix form today - resurgence based on:
matrix diamond illustrates needed skills
...